• Kavya Ravikanti

Financial Planning on a Commission-Based Salary - Mercy Plumb

This week we Mercy Plumb, who talks about how difficult it can be to plan your finances on a commission-based salary. She also shares her student loan experience and how she wishes she better understood her loan terms before signing up for them.


Occupation: Financial Representative

Age: 24

Salary Range: $50,000 - $70,000

Location: Richmond, VA, and Charlottesville, VA

Student Loans/Debts: personal car loan, $20,000 student loans (recently paid off!)

Monthly Expenses: $1000-1,500 (food, insurances, car loan, business expenses, excluding rent.)


Kavya: Tell me a little bit about yourself? Where did you go to college and when did you graduate?

Mercy: I'm originally from Roanoke, Virginia. I had a unique route for college as I went to community college for two years and then transferred to UVA. I graduated in 2019 and currently live in Richmond, Virginia.

I'm really family-oriented and my parents stressed the importance of open dialogue even when it came to hard topics like money from an early age. Not only have I learned about money from my parents, but also watching my 4 older brothers navigate their money has taught me a lot.

Kavya: Take me back to your earliest memory with money. What was the first time you thought about handling money for yourself?

Mercy: We didn't have an allowance when we were young so we had to figure out other ways of making money if we ever wanted it. Ever since I was 12, I would help out my dad at his job with things on the side and he would pay me for it. I later turned to babysitting, serving at a restaurant, and working at a coffee shop throughout high school to save up money.

The primary motivation for a lot of this was my parents had made it very clear early on that they wouldn't help pay for college. So in high school, I knew I had to kick things into high gear to make it work.

What's crazy is a month before going to community college, they told me they would actually help pay for some of it. I remember being upset initially, but they really wanted me to learn the value of money early on.

Kavya: Why did you decide to go to community college? Was it a financial decision?

Mercy: I got a scholarship for the first two years of community college so not paying for 2 years of tuition was a huge financial relief. During that time, I was also able to save up all the money I made from working on the side. When I did transfer to UVA, this allowed me to have some bandwidth to help me out.

When I was going through the transition process from community college to UVA, I knew I wanted to get into the business school at UVA which was extremely competitive. So I had to be 100% sure I wanted to go to UVA and if I wanted to study business otherwise it felt like a waste of money for such an expensive education.

Through my work, I ended up coming across this couple that was a huge fan of UVA and took me under their wing as a mentee. I was super lucky as they even offered to pay for a semester of college if I got into the business program.

Long story short, I got into the business program and then even ended up paying for another semester so I didn't have to pay for tuition during my first year at UVA.

I know I got really lucky there but I also wouldn't have come across that opportunity if I didn't work so hard all of those years. Money can be a negative driver but if you have a good relationship with it, it can be really powerful.

Kavya: How did your relationship with money change after transferring to UVA and when you had to start paying for college?

Mercy: I felt like I had to adult a lot during my first year at UVA (after transferring). I started paying for rent, food, and all the amenities that went with getting an apartment for the first time. That was when I first understood that it didn't hurt as much to spend. I had a cushion saved up, but even when it was gone, I wasn't feeling horrible about it. It was just that things weren't as comfortable as it used to be.

I realized that I needed to be a lot more strategic about my money and take into consideration all the factors that affect how much money I spend and earn. So during my 4th year, I found an apartment that was much cheaper. I had residual income from a job kick in to help me cover some expenses. I picked up a job that gave me the flexibility to earn money while I was in school.

I also ended up taking out student loans to help me pay for my final year of college. I probably took out more loans than I needed to but I also wanted to have an emergency fund after covering my expenses and tuition.

That year made me think about my relationship with money because you need it to live but how much did I actually need to live comfortably?

Kavya: What was the transition from UVA to post-grad life like for you?

Mercy: I really wanted to live in Charlottesville to start my career but I knew that was risky since my job is commission-based. Having $700 a month go out the window each month is scary when I could be saving that money by living at home.

So I have been living at home since I graduated and I set up some goals for myself to reach so that I can move out on my own after hitting those goals. I want to lower my debts/pay them off, have a more consistent income, and have a low rent or mortgage payments I feel comfortable making each month.

I also started tackling my student loans. I quickly realized I wish I did more research before taking out my loans. There was no grace period for my loans and I felt like I was paying a lot of interest while still in school. I've been really eager to pay off my student loans and by the end of August 2020, I'll have my loans paid off! I cut back on a lot of expenses to make this happen.

Kavya: How did you handle your student loans while in school and post-grad?

Mercy: I had to pay interest while I was still in school when I took them out during my 4th year and none of those payments were going towards my principal.

During the first 6 months of my loan, I had a lower minimum payment which would go up quite a bit at the end of the 6 months. I ended up putting away a few thousand dollars initially towards my loans from my savings, which lowered my minimum payment each month from $340 to $160.

Now I pay $200 a month, which is my minimum plus a little bit. Anything above my minimum payment goes directly towards my principles instead of interest.

I had the option of freezing my payments when the pandemic hit, but I would still have to pay interest. So I decided I wanted to just pay them off as fast as I can. Understanding how your loans work is super important since each company operates differently.

Kavya: When you realized your job would be paying you based on commission, did that affect the way you were thinking about your finances? What were some considerations you have had to make?


When you are paid on commission or have an inconsistent salary you are going by the seat of your pants.

Something I learned from another advisor is to pay yourself with money through savings and discretionary funds. I've had a hard time finding the balance there, but I realized for myself that I want to live below my means.

Somethings I have done to make this easier for myself:

  1. I make sure my car payments, loan payments, etc are during the last week of the month. Some people like to get these out of the way at the beginning of the month, but I like having the funds in my account for a little bit longer.

  2. Creating balance and being flexible. 20% savings, 60% expenses and 20% discretionary is what I've been following but also knowing that this will change month to month based on how much money comes in each month.

Kavya: What does your personal finance system look like? How do you think about day-to-day expenses and long-term savings?

Mercy: My expenses are pretty low: I look at my monthly expenses every several weeks, reworking it based on my lumpy income. I use the monthly budget sheet Northwestern Mutual provides. I also use mint!!

A break down of my expenses:

$0 to rent since I'm living at home

$200 to student loans

$100 to car insurance

$200 to discretionary - eating out, entertainment, etc

$200 to life insurance

$400 personal car payment

$200 groceries

$70 gas

$300 business expenses (recently added)

Kavya: Why did you consider getting life insurance?

Mercy: A quick jargon check: There are two types of life insurance - term and permanent. Term is temporary and permanent is till you die.

I recently inherited a permanent life insurance policy that my dad took out for me when I was 16 and I also took one out for myself.

For me, life insurance provides safe dollars that no one else can touch. I'm covered if something were to happen to my health and I can also access the money for different life moments that might come up along the way, down payment on a house, downturns in the market during retirement. It also doesn't flux based on the market.

Kavya: What are some mistakes you've made with managing your money? What would you suggest people avoid doing?

Mercy: I just went through the auto insurance search and I did a ton of research to understand the different options. I knew that I had to ask the right questions, not because I thought I would be scammed, but because I didn't want to pay a lot of money for little in return.

When you are thinking about setting something up that's going to be a consistent monthly payment for the long term, it's important to know what you're really getting into.

Keep this in mind for big purchases as well. Understand the value of what you are getting. When I bought my last car (used), I didn't do enough research on whether not the car was worth the cost. It ended up being a big headache as it was more work than I could have handled. I just assumed that it would be fine.

I wish I did a lot more research with my student loans as well because I was so envious of my friends who had a complete freeze on their loans until after they graduated and those who had freezes due to COVID-19.

Kavya: What is one piece of actionable advice you have for someone starting out on their financial journey?

Mercy: Do your research, take everything with a grain of salt, and have an open mind.

I would also add that being in my role, I’ve heard everything: “I’m invincible,” “how do I everything that I want,” “my parents already have someone they use,” and lastly “I don’t need to start financial planning yet.”

To these people, I would say “I wish I were invincible but I’ve heard one too many stories,” “everything in moderation and balanced,” “take the time to learn on your own then make sound decisions,” and “it’s never too soon to take control of your financial well-being. Be a student in life, eager to learn and grow.

Rapid Fire

What credits do you have and why did you get those ones?

I have two cards from USAA. One's for personal expenses and one I use for work to write off expenses. I choose these because I'm from a military family and they have a good reputation.

What percentage of your income do you save annually?

I save about 30-40% of my income. I don't have a lot of expenses this year and in general, as I live at home. I save most of it in my savings account and I'm hoping to put it towards a down payment on a home down the line.

What tools apps or services do you use to manage your money?

I use mint and a PDF that I have that creates a budget for me. This sheet has been really helpful to section out where my money should be going.

Any resources you'd recommend?

Robinhood Snacks podcast - not about personal finance but covers financial news. They also have a newsletter which is great. Morning Brew is an email subscription that is a great source of business news

Get stories like this one and more delivered to your inbox by subscribing here. We want to hear from you, tell us what you thought of Mercy's story here.

Most personal finance blogs only share stories of the people who have it all under control, save 50% of their income, and retire early. While that is impressive, some of us want a career and some of us just need our oat-milk matcha latte every morning. However, we all still face the same woes when it comes to managing our personal finances. MoneyStories is a series of interviews with young professionals and recent graduates sharing their stories on how they have and are navigating their personal finances.

Disclaimer: Views, thoughts, and opinions expressed in the text belong solely to the interviewee, not the author, and not necessarily to the author’s employer, organization, committee, or any other group or individual.

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